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Statics and Dynamics
Economic models deal with stock and flow variables. These variables can be in one of the two states - equilibrium or disequilibrium - at a particular point in time. If the variables are in the equilibrium state and tend to repeat themselves from one time period to another, we have the case of "stationary equilibrium". If the variables are in a state of disequilibrium, in all likelihood they would have different values in the next time period.Models which do not consider explicitly the behavior of variables from one time period to another are called 'Static' models. In static models, the variables do not have time dimension. Because these models do not consider the passage of time, they cannot explain the process of change. Static models indicate the values of variables for a given time period but cannot indicate what their values will be in the next period. At the most they can only indicate the direction of change. In contrast, dynamic models consider explicitly the movement of variables over different time periods. What happens in one time period is related to what happened in the preceding time periods and what is expected to happen in the succeeding periods. In other words, variables in dynamic models are said to be 'dated'. These models indicate the movement of variables from one disequilibrium position to another, until the variables ultimately reach the equilibrium position.
Briefly explain the dynamics of the 2007 financial crisis in terms of adverse selection and moral hazard.
Example of Fixed Investment-ACCOUNTING SYSTEM Consider again the economy in example III. An inventor offers to construct some machines for each of the three companies which wo
i have an assignment i need it to be done by thursday march the 10th before midnight
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If the AD excess is $300 billion and the MPC is 0.8 how much fiscal restraint is required? What does the "debt held by the public" mean?
Tariff Reform: India's customs tariff rates have been declining since 1991. The "peak" rate came down from 150 percent in 1991-92 to 40 percent in 1997-98. The downward mom
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definition and charactoristics of index numbers.problems while constructing index numbers
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